Today, India seems to be going from strength to strength, not just on the economic front but also in defence. It has entered a global elite club by launching its first indigenously made nuclear submarine, INS Arihant (which means destroyer of enemies). The bulls of course have been decimating the bears over the past couple of weeks. Given the healthy state of global markets and strong earnings, one shouldn’t be surprised if the current rally lasts another 10-20%.
The next crucial technical level to keep an eye on in the short term is 4700 on the Nifty. A breach of this level could propel the index past 5000. On the downside, support is likely to come in at around 4350-4400. We expect a positive start today, but the gains could be restricted by some pressure on index heavyweight Reliance Industries, whose Q1 results fell short of consensus estimates.
A lot of other big results came in during the weekend and some more are on their way. We also have to contend with the F&O expiry. Before that, the RBI will announce its quarterly policy review tomorrow. The markets do not expect the central bank to tinker with rates, but regulators and markets rarely think alike. The best approach is to wait and watch. In any case, most of the monetary and fiscal measures have been announced. The fear now is will the liquidity deluge and the government's massive borrowing programme fuel inflation going ahead? If it does, how that will impact the economy, India Inc. and the markets.
